Is China the World's Leading Cyberspy?

This is first of a three-part series examining the industry fallout from China's alleged cyberspying, and specifically if the spying has hurt the tech industry. Today we review history, piecing together evidence of spying with China's pattern of denial. Science writer Kevin Fogarty takes an in-depth look for EE Times.

Despite years of accusations and mounting evidence that its military intelligence divisions are among the most aggressive cyberspies in the world, China categorically denies digital spying of any kind. Period.

The US indictment of five Chinese military officers for attacks on US companies is an "absurd" effort based on "fabricated facts" made for "ulterior motives" against a country that is the "victim" of online espionage, not the perpetrator, according to a spokesman from the Chinese Foreign Ministry.

"China is a staunch defender of cyber security" that has never "engaged or participated in the theft of trade secrets through cyber means," according to a published statement from Chinese Foreign Ministry spokesman Qin Gang.

No matter how serious the charges or how damning the evidence, the response from China is always an absolute denial, usually followed by counter accusations that China's accusers are the real victimizers.

The indictment announced by the Dept. of Justice May 19 charged five members of the People's Liberation Army (PLA) of stealing data from the networks of five US companies and one trade union.

The five are officers, senior staffers, or contractors working for the Shanghai-based Unit 61398 of the PLA, which is infamous for the high-volume, heavily automated attacks blamed for the theft of "hundreds of terabytes" of technology blueprints, negotiation strategies, pricing, and financial data and other information from 141 companies and organizations between 2006 and 2013, the vast bulk of them in the US, according to the February 2013 report from security firm Mandiant, which is the most detailed publicly available analysis of the attacks.

Mandiant used more than 3,000 bits of data residue from Advanced Persistent Threat (APT) attacks back to a building in Shanghai that houses the 2nd Bureau of the People's Liberation Army (PLA) General Staff Department’s (GSD) 3rd Department, Unit 61398.

The same unit, and its role as a leading cyberspy for both the Chinese military and commercial enterprises, was also described in a 2011 report from similar reports from China-watching think tank the Project 2049 Institute.

Many of the same indicators pointing to Unit 61398's involvement in a five-year series of attacks on more than 70 companies that investigators dubbed Operation Shady RAT were found by McAfee in a 2011 report, later confirmed by Symantec Inc.

"This is the biggest transfer of wealth in terms of intellectual property in history," McAfee VP of threat research Dmitri Alperovitch told Reuters after release of the Shady Rat report. "The scale at which this is occurring is really, really frightening."

This is a professional forum with a focus on technical discussion. I am surprised that such a propaganda article was placed in the front page.

U.S government never hesitate to hack foreign companies, both in Asia and Europe, as admitted by the NYT:

"The National Security Agency has never said what it was seeking when it invaded the computers of Petrobras, Brazil's huge national oil company, but angry Brazilians have guesses: the company's troves of data on Brazil's offshore oil reserves, or perhaps its plans for allocating licenses for exploration to foreign companies."

"The agency's (NSA) interest in Huawei, the giant Chinese maker of Internet switching equipment, and Pacnet, the Hong Kong-based operator of undersea fiber optic cables, is more obvious: Once inside those companies' proprietary technology, the N.S.A. would have access to millions of daily conversations and emails that never touch American shores."

"the government does not deny it routinely spies to advance American economic advantage, which is part of its broad definition of how it protects American national security. "

Also, keep in mind that U.S government is not only hacking companies in China and Brazil, but also constantly hacking its allies, including the government network of various EU countries, and tapping the personal phone of German Chancellor and French President ( http://www.dailymail.co.uk/news/article-2474635/German-fury-US-deny-Merkel-phone-hacking.html ). All I see are some shameless hypocritical americans, trying to claim moral high ground when there is no moral high ground for them to claim.

I am not sure if China is world's leading cyberspy, but americans are definitely leading in hypocrisy and double standard.

I have little doubt that the Chinese are spying big time, but the pot can't be calling the kettle black. When the NSA uses criteria such as allowing itself to monitor communications three times removed from some "person of interest," surely everyone must know that this will cover just about 100 percent of US citizens. And that particular criterion only applies to spying on US citizens!

The most cogent counter-argument I've heard from our own spying efforts is that we aren't targeting companies, for our financial benefit. Well, good for us. At the same time, let's not get too self-righteous about this. It sounds hypocritical.

It's interesting that this is one area of technology where no one wants to say that they are the best. Discussions about the moral high ground on one side or the other are ultimately not all that relevant, especially since this is much more than a two-horse race. Spying and gathering intelligence is a fact of life on every level. Individual people do it, companies do it, and nation-states do it. When individuals or companies do it they are subject to being held accountable to laws that can punish them. Nation-states may or may not regulate their own activities in this area. Often they claim exceptions to those laws or try to cover up what they are doing. When they are caught doing that other nation-states may try to make them change their behavior. Sooner or later they negotiate expectations as to what is and isn't acceptable behavior. If they can get there without shooting at each other then all the better.